Top
Begin typing your search above and press return to search.
keyboard_arrow_down
Login
exit_to_app
Women and girls need to be safe
access_time 2021-01-15T15:08:45+05:30
Another Trump impeachment
access_time 2021-01-15T11:16:29+05:30
Covid 19 spread
access_time 2021-01-14T15:40:30+05:30
Freezing the Centre or the farmer protest?
access_time 2021-01-14T12:55:08+05:30
DEEP READAll arrow_drop_down
Anti-Conversion Law: A law meant for abuse
access_time 2021-01-12T13:56:35+05:30
Syed Shahriyaar
access_time 2021-01-05T19:08:46+05:30
Reading A week in the life of Svitlana
access_time 2020-12-23T12:06:42+05:30
Hum Dekhenge- One year of Anti-CAA protests
access_time 2020-12-22T17:35:06+05:30
The French Fanatic and the Fanatic Fringe
access_time 2020-11-02T15:56:00+05:30
exit_to_app
Homechevron_rightBusinesschevron_rightAmbani brothers bury...

Ambani brothers bury hatchet, sign Rs. 1,200-crore deal

text_fields
bookmark_border
Ambani brothers bury hatchet, sign Rs. 1,200-crore deal
cancel

New Delhi: Billionaire Ambani brothers will share a fibre optic network for their rival telecoms companies, their first business tie-up since ending a long-running feud three years ago.

Reliance Industries, controlled by Mukesh Ambani, India's richest person, will pay Rs. 12 billion ($221 million) to younger brother Anil Ambani's Reliance Communications for use of its fibre optic network.

The companies said on Tuesday they could co-operate further in future and the announcement bolstered their share prices.

Reliance Industries, whose main business is petrochemicals, made a dramatic return to telecoms in 2010 by becoming the only company to gain nationwide 4G airwaves. While it has yet to start services, it is widely expected to begin operations in parts of India later this year.

Debt-laden Reliance Communications, India's third-largest cellular carrier by users, was hived off from the combined Reliance empire after the brothers split up the family businesses in 2005 in a deal brokered by their mother.

Under the terms of Tuesday's fibre optic deal, Reliance Industries will pay "one time indefeasible right to use (IRU) fees for sharing RCOM's nationwide inter-city fibre optic network infrastructure," the companies said.

Reliance Communications shares jumped as much as 17% after the news before closing 11% higher. Other Anil Ambani group stocks also gained. Reliance Industries' stock closed up 2%.

More co-operation

Further details on the tie-up were not immediately available, but the companies indicated more cooperation was possible.

Media reports have long speculated that Reliance Industries would lease space on Reliance Communications' tower network or buy an equity stake in the tower business.

"This agreement is the first in an intended comprehensive framework of business co-operation ... for optimal utilisation of the existing and future infrastructure of both companies on reciprocal basis, including inter alia, inter-city fibre, intra-city fibre, towers and related assets," the companies said.

Reliance Communications is the most leveraged among Indian cellular carriers with net debt of nearly $7 billion, or more than five times its annualised operating profit. The company has been looking to sell assets to cut its debt load but has fallen short in several attempts.

"It is definitely a relief for Reliance Communications, and a relief coming to the group after a long, long time even though not sufficiently large," said Jagannadham Thunuguntla, strategist at SMC Global Securities in New Delhi.

Tuesday's deal will help Reliance Jio Infocomm "reach the market faster," said Deven Choksey, managing director of KR Choksey Securities in Mumbai.

According to Forbes, Mukesh Ambani is worth $21.5 billion, while Anil Ambani is worth $5.2 billion.

Dhirubhai Ambani's death in 2002 led to a power struggle between his two sons that split the Reliance empire. Mukesh ended up with the core energy business, and Anil ended up with the telecoms, financial services and power businesses.

Reuters

Show Full Article
TAGS:
Next Story